Study finds Medicaid expenses bring minimal improvement to health

There has been much discussion of a study, published in the New England Journal of Medicine, which took advantage of a unique opportunity to measure the relationship between health-insurance expenditures and actual improvements to health.

The paper follows a 2008 expansion of Medicaid benefits in Oregon, which used a lottery system to randomly select new beneficiaries, since the state couldn’t afford to cover everyone who applied. Researchers were then able to compare the low-income adults who won enrollment in the Medicaid expansion with a very closely-matched control group, over the course of several years.

Contrary to liberal assumptions, researchers found that those who enrolled in Medicaid spent a lot more on medical care than those who weren’t able to enroll, but didn’t significantly improve their health outcomes.

Specifically, researchers found that those who received Medicaid increased their annual health care spending by $1,172, or 35 percent more than those who did not receive Medicaid. Those with Medicaid were more likely to be screened for diabetes and use diabetes medication and to make use of other preventive care measures. The study also examined health metrics including blood pressure and cholesterol.

Ultimately, the authors concluded that, “This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured health outcomes in the first two years, but it did increase use of health services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.”

Researchers also found no “significant changes in visits to the emergency department of hospital admissions.” As Klein notes, this runs strongly counter to the argument that access to health insurance would reduce heavy reliance upon emergency rooms, which was one of the biggest arguments in defense of ObamaCare. We were often warned about the heavy costs incurred by emergency rooms, which could not turn away the uninsured, who had nowhere else to go.

So we’re about to blow a trillion dollars on a Medicaid expansion that won’t significantly improve health, or alleviate emergency-room traffic, if the results of the Oregon study hold up at the national level. The relatively small sample size of the Oregon study has been called into question, which is fair enough, although plenty of other public policy decisions are made based on relatively small studies. It has also been suggested that lives of those who entered the Oregon Medicaid expansion were improved by the experience – they apparently showed reduced levels of depression and anxiety – but there have to be more efficient ways to achieve those life benefits than Medicaid.

One of the problems with health care “reforms,” most definitely including ObamaCare, is the tendency to treat health insurance and medicine as synonymous, while viewing health insurance as a single huge benefit that covers all health-care needs. It would be far more cost-effective to separate true “insurance,” in which companies can make a profit by selling inexpensive protection against catastrophic expenses to relatively healthy people, from other benefits that don’t fit the concept of insurance at all: care for those with pre-existing conditions, preventive medicine, and so forth. The reason ObamaCare is driving up so many peoples’ insurance premiums is that it mandates the inclusion of benefits they don’t necessarily want, erasing the distinction between the insurance needs of people in different demographics.

The equation of health insurance with medicine, meanwhile, separates consumers from producers, perhaps more widely than with any other product. The gulf will grow wider still, if the failure of ObamaCare is followed by the expected push for single-payer socialized medicine. Let people choose from a wide range of insurance options in truly competitive markets, let them have the awareness and control of health care expenditures that can never exist when insurance covers everything, separate insurance from employment so that individuals enjoy proper ownership of their plans, make efficient and carefully monitored allowances for those in genuine poverty… and we might see both insurance and health care costs come under control.

But that’s pretty much the opposite of pumping a trillion dollars or more into Medicaid. At the very least, can’t we agree that if we’re going to spend that kind of money on a program, the benefits shouldn’t be so minor that researchers have trouble detecting them?